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Determination/Entry of your own Exchange Rate for Translating Tax Amounts

Description

For postings in foreign currency, you can specify an alternative exchange rate for translating taxes. This can also be proposed via customizing from the exchange rate table using the posting date or document date. A resulting exchange rate difference in local currency is automatically taken into consideration and a separate line item is generated for it during posting.

Change system parameters in customizing

In the Financial accounting Implementation Guide, you can determine that entering a tax rate is allowed or that the tax rate is always proposed from the exchange rate table by means of the posting date or the document date in the case of taxes.

For more information, refer to the "Change foreign currency translation" chapter in the Implementation Guide.

If you are using your own exchange rate for calculating tax, an exchange rate difference posting is created. The account for this can be set via the Financial accounting Implementation Guide. Read the "Define account for exchange rate difference posting" chapter.

Changes in procedure

In the Financial accounting Implementation Guide you can determine for each company code whether a separate exchange rate can be entered for the translation of the tax amounts in the case of foreign currency postings. Four default settings are provided:

The field for the alternative exchange rate for translating the tax amounts is on the entry screen for tax data. When entering a document, if an exchange rate which differs from the exchange rate in the document header is used for translating the tax amounts, the resulting difference in local currency is automatically taken into consideration and a separate line item created for it during posting. The respective exchange rate difference is also displayed on the tax screen. If the tax amounts in local currency are changed manually, this change does not result in an exchange rate difference posting.

The account for the exchange rate difference posting must be defined in customizing (via the Implementation Guide).

In the two last cases, translation of the tax amounts is always carried out using the defined exchange rate, even if the taxes are not entered on the tax screen. If your own exchange rate is neither proposed nor entered for the translation of the tax amounts, the translation is carried out as before with the exchange rate that results from the base amounts belonging to the tax code in document currency and in local currency.

Further notes

This function is not intended for down payment requests and down payments. For these transactions, the tax is always translated with the exchange rate of the down payment amounts; with the posting to a prior period or with clearing, the transfer posting is then made with this historical value.